As usual, Elliott Management’s Paul Singer found plenty to criticize in his quarterly letter to investors.
Singer wrote to tell his clients that his Elliott Associates returned just 2.5% in the first quarter. And while he dealt with the fund’s investments in an addendum—Elliott sold off its stake in Delphi Automotive—the body of the missive was focused on the flaws of others.
Singer mocked Federal Reserve Chairman Janet Yellen as “Yellen the Magnificent,” warning that the Fed “is achieving total political power in a political vacuum, without the accountability of being elected.”
“The Fed has lost any semblance, any wispy remnant of humility, introspection, caution and historical perspective,” he continued. “It is all cameras and applause.”
“If you open a faucet in the winter and only a trickle comes out, what do you do? Easy! Open it wider. In fact, open all the faucets! Brilliant! Now they are all trickling. But when the pipe blockage comes unstuck or the ice melts, you will have a flood.”
Elliott said that Yellen is “actually acting like the leader of the so-called free world,” but is worried about the wrong things.
“We occasionally worry about asteroids hitting the earth, or a major solar storm that could bring down the power grid for a long period of time and result in the deaths of millions of people,” he wrote. “Either scenario is more likely to happen than the deflation that evidently keeps the world’s central bankers up nights.”
Singer went on to complain that the U.S. is not accurately accounting for its debt, leaving the economy ripe for disaster. Pointing to U.S. obligations such as Medicare, Singer wrote, “Only someone who has never run a business could say with a straight face that such obligations are not really liabilities and need not be included in the accounting.”
And, of course, he found time to deal with a government he likes even less than that of President Barack Obama’s: Argentina’s.
Elliott has been battling the country in U.S. courts, seeking full repayment of its defaulted Argentine debt. The case appears to be on the verge of heading the U.S. Supreme Court, after a string of lower-court victories for Elliott. In spite of that, however, Singer wrote that Argentina appears uninterested in talks.
“‘Radio silence’ is the best description for the current regime’s response to our frequent requests to negotiate a resolution,” he wrote. “We have no choice but to pursue legal actions to enforce our claims.”
A Supreme Court victory for Elliott could force Argentina to default on its restructured debt.